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Most lenders check your credit rating before deciding to lend to you. If your rating is good, you'll generally get the credit at a competitive rate. If your rating is poor, expect to be charged a high rate of interest or refused altogether.

To judge your credit rating, lenders use two main techniques:

Credit scoring: The lender asks questions about your job status, earnings, time at your current address, existing credit, and so on. You get points for each answer and the total helps the lender decide if you are the sort of customer it wants. Every lender uses its own scoring system, so you may be turned down by one but accepted by another.

Credit reference: Nearly every adult is on file with the three UK credit reference agencies (see Useful Contacts). Lenders check with an agency to verify your identity and see how you have handled your past and current debts. If you ask, the lender must tell you if it has used an agency and, if so, which one. You have a legal right to check your files at any of the agencies on payment of a £2 fee. You can correct any mistakes at no cost - the agency will tell you how to do this.